Trends and Sources of Income Inequality between Native-Born Canadians and Immigrants from Non-European Origin, 1996-2006

Said Ahmed Aboubacar, Institut National de la Recherche Scientifique

In this study, we use the Oaxaca decomposition method to determine the role of contributing factors in income gap between native-born Canadians and immigrants. Based on data from the Canadian Survey of Labour and Income Dynamics, the results show that while the gap in per capita household income has narrowed slightly during that decade, it remains very large between the two groups. In addition, regression analyses show that the significance of the effect of nearly all factors remained almost the same through the years for natives, whereas for immigrants, the importance of many human capital factors has been lessened in some cases and strengthened in others. Finally, the findings show that differences in personal characteristics explain very little the gap in per capita household income. Rather, the origin of the difference is found to be rooted in other unobserved factors including preferential treatment of the characteristics of natives.